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If you are not in the real estate industry, you are most likely unaware of how your home’s value is determined. Many individuals such as yourself believe that your home’s value is equivalent to the price you purchased the home with inflation. We hate to be the bearer of bad news but there are many other variables that must be considered when evaluating a home, and sometimes a home’s value can actually depreciate over time. To help you better understand what we consider when we value a home we have made a simple outline for you. So, if you are considering selling your home you can take a look around and see how your home compares.

The Real Estate Market and The United States Economy

The market is really what sets the price of your home. No matter the additions and upgrades you have installed, if we are in a bad market your home’s value may decline. But how can you tell how the real estate market is doing? A simple assessment of the United States economy can be your first indicator on how the real estate market is doing – generally, the economy is a direct reflection of the housing market. You do not need to be an expert in the field; instead, you can conduct a simple search on the internet and catch up on the national news headlines. This can be a great start to identifying how the economy and how the housing market is doing.

There is an exception to this assumption however. If you live in a highly sought out market, such as San Francisco, your home’s value may not be directly impacted by the market. But, if you live in an area such as Baytown, you can be sure that the local and national market will have an impact on your home’s value.

Market Comparables and Property Characteristics

Market comparables, or market comps, are essential when valuing a home, and if you can understand the data involved, you can even gain a better understanding of the economy via these comps. The first step is to understand, what are market comps? When your home is being evaluated, a professional will look at homes that have sold in your market or are available for sale in your market. This gives an understanding of price points for homes – more specifically, price per square foot. However, when completing this assessment there are many factors that need to be considered to determine if the comp is an appropriate one to utilize when evaluating your home. We at Gulf State Homebuyers consider a variety of aspects when evaluating a home, including: condition, year built, amenities and upgrades, number of bedrooms and bathrooms, square footage, and more. Every additional luxury can add value to a home. For instance, for 2019, homebuyers are seeking eco-friendly homes that provide adequate open spaces. Therefore, if your home matches what the buyers are looking for, your home could increase in value.

A unique home to value is one that has been damaged, say by a recent hurricane or a fire. These homes can be a bit trickier since they require much more upfront capital to improve. When evaluating a home that has severe damages we take into consideration the value of the home prior to the damages along with the estimated cost for renovations, including time and money. We differentiate ourselves from the insurance companies in a major way however, in respect to our motives. We are not looking to give you as little as possible; but instead provide a fair valuation of the homes fair market value.

Getting a Professional Opinion

To get a true understanding of the fair market value of your home it is recommended that you seek the assistance of a professional. Individuals in the field are continuously working with homeowners, reading market updates, and assessing home trends, which provides them with the understanding of how to value your home at a competitive price. One of the worst things an individual can do is evaluate their own home and set the expectation of that selling price. Due to an emotional connection, many homeowners value their homes above their true value.

If you are considering selling and would like a free market evaluation, we here at Gulf State Homebuyers are happy to help. We specialize in purchasing homes in the Baytown area and therefore spend our days living and breathing the local real estate economy. We purchase homes all cash and provide an easy solution for residents to close quickly. We purchase homes of all types, including those that are damaged by fire or rain, homes that are heading towards foreclosure, and even homes that have unwanted tenants living in them. To get started with your free home evaluation, contact us today.

Many reports label millennials lazy, suggesting that they are averse to working and lack the motivation to pursue the American Dream. Unbeknownst to many, over the last 50 years, the United States economy has undergone a major shift that is deeply impacting the ability of millennials to achieve the so-called American Dream, reducing their chances of owning a home.

A recent study completed in October by Bank of America found that 72% of millennials, which they identified as individuals born between 1978 and 1995, have listed being a homeowner as a “top-priority” in their lives. With such high number, why aren’t millennials purchasing more homes?

The Impact of Student Debt

Most millennials were pushed to enroll in college following high school, which generated enormous debt for student’s post-graduation; understandably, when you already have $50,000 or more of looming debt, taking on a mortgage is frightening.

The Belief that We Are Approaching Another Recession

Many analysts are forecasting that by 2020, the United States will be hit with another recession. Most argue that it will not be as severe as that of 2007; however, as millennials were witnesses to the economic impacts that the 2007 downfall had on the population, they are wary of purchasing a home at this time. The fear is that they will lose the home not long after the purchase. And although interest rates have been moderately low, few have acted.

Low Pay and High Cost of Living

If you take a closer look at many postings for job openings, you will see employers hiring people at $10 – $15 per hour and requiring a college education; many master level positions are paying below $20 as well. Compared to the cost of living in most major areas, including the Houston area, this pay rate does not enable someone to purchase a home. The average rent is 30% of the renter’s income – but those who earn near minimum wage end up paying nearly 50% of their income toward rent! This high cost of living makes it challenging for individuals to save the money for a down payment on a new home.

Lifestyle Changes

We can also gain some insight by shifting lenses and looking at the social aspects of millennials’ lives. There is a noticeable difference in their values and life trajectory compared to those of baby boomers. First off, they are marrying later in life. While twenty years ago, it was common for someone to marry in their early 20’s, it is now more common for couples to marry in their early 30’s. One major contributing factor is the transition from skilled jobs to professional careers, which demand years to develop rapport and professionalism. No longer are people satisfied at entry level positions; rather, there is a higher percentage of men and women committed to building their career prior to getting married.

Another lifestyle change that is impacting the pattern in which home buying occurs is that millennials are less interested in material items and more interested in spending their income on experiences. With this mindset, they are struggling to save the capital for a down payment.

Lastly, there is also the trend towards digital nomads. This professional decision to build a company online, or work as an online freelancer, is reducing the number of people dedicated to purchasing a home. Instead they are utilizing their income to fund a nomadic lifestyle built around working abroad. There are even companies devoted to organizing digital nomad groups, which meet for anywhere from one a week to one year, providing people with the essentials they need to comfortably work and live abroad.

High Home Prices

The real estate market has been a seller’s market for some time now. This means that homes are selling at higher prices, inventory is low, and competition is tough. Additionally, due to the increased price of homes, those who already own homes have been hesitant to sell. Although interest rates have seen a decline over the last few years, the increase in home values has made it challenging for millennials to transition to their own home.

Looking at The Future

There is no simple answer to the question of why millennials are not purchasing homes. There are both economic and social influences that have had a major impact on the shift in home buyers in the United States. If the economy can push through the expected recession and provide millennials with more confidence in their future with buying a home, we may anticipate an increase in home buyers.  If you are in the market to sell or buy a home, contact us today!